Establish your business
Choosing the right entity for your business
The Gibraltar Companies Registry is now fully automated and company formation in Gibraltar is a highly efficient process. A Gibraltar company will generally be incorporated within two to five days, but same day incorporation can be secured for an additional fee. Approval of a company’s name is required prior to incorporation.
A Gibraltar company is required to maintain a minimum presence in its place of incorporation – a registered office and a resident company secretary and/or a resident agent. We typically provide these services for all our clients and describe them as ‘domiciliary services’.
Companies in Gibraltar are subject to Gibraltar corporation tax on their profits. The standard rate of corporation tax is 12.5%. The territorial basis of taxation applies, which means that only profits that are accrued in or derived from Gibraltar are subject to tax.
In practice, this generally means that if the profit-making activity of a company is wholly outside of Gibraltar, it has no liability to tax in Gibraltar. However, profits will be ‘deemed’ to accrue in and derive from Gibraltar in certain cases, as follows:
- Profits of a company that is licensed and regulated in Gibraltar (except for activities carried on outside Gibraltar by a branch or permanent establishment)
- Where a Gibraltar company receives royalties
- Where a Gibraltar company receives inter-company loan interest (subject to a threshold)
Gibraltar does not levy withholding taxes on dividends, interest or royalties.
All Gibraltar companies are required to file tax returns, which should be accompanied by annual accounts.
Gibraltar has no capital gains tax, no wealth tax, no inheritance tax, no gift tax and no value added tax. It also offers tax exemptions for various types of income (notably, inter-company dividends, dividends from quoted shares, dividends paid to non-residents and bank interest) and has attractive regimes for high-net-worth individuals and relocating executives.
Public Limited Company
A Gibraltar Public Limited Company may issue shares to the general public and may be quoted on the stock exchange. In order to be registered as a PLC, certain conditions must be satisfied. The Articles of the company must state that it is a public company and the name must include the words ‘Public Limited Company’ or ‘PLC’.
Private Limited Company
A Gibraltar Private Limited Company may issue shares to a restricted group of people. It is not permitted to offer shares to the general public and its shares may not be quoted or traded on any stock exchanges. All companies that are not public companies are private companies, including companies limited by guarantee and unlimited companies.
Company Limited by Guarantee
A Gibraltar Company Limited by Guarantee does not generally have a share capital or shareholders, but instead has members who act as guarantors. The members give an undertaking to contribute a nominal amount (typically very small) in the event of the company being wound up. A company limited by guarantee is a distinct legal entity from its owners, and is responsible for its own debts.
Protected Cell Company
A Gibraltar Protected Cell Company (PCC) is a limited liability company that is able to form cells that are segregated from each other and from the company, such that the assets and liabilities attributable to each cell are ‘ring-fenced’. A PCC is a single body corporate, consisting of a core company, and an ‘umbrella’ structure consisting of any number of subdivisions (cells).
A Gibraltar Foreign Company may be registered as having a presence in Gibraltar either by registering a branch or by registering a place of business.
Registering a Place of Business is generally more appropriate for non-trading entities with no selling activity in Gibraltar. Every entity with a non-trading office in Gibraltar must establish a place of business. A place of business is a contact point for your company, or a non-trading branch of your company.
A Gibraltar Company Limited by Guarantee with a Share Capital, often known as a ‘hybrid’ company, is limited both by shares and by guarantee and has two classes of member – shareholders and guarantee members. Typically, the company will be structured so that the shares are issued on terms that each carries one vote but has no rights to dividends or to participate in the capital or income of the company in any other way.
Gibraltar’s DLT regulatory regime, introduced on 1 January 2018, is focused on the application of principles rather than rigid rules that couldquickly become outdated for businesses based on rapidly evolving technology. It aims to create a centre of excellence for these technologies and an environment in which operating models and organisational structures can be explored, with new entrants able to participate freely.
In order to take advantage of Gibraltar’s entrepreneurial regulatory approach to DLT regulation, firms will have to demonstrate that they have ‘sufficient substance’ in Gibraltar. In practice, this will require premises in Gibraltar, local directors with expertise, anti-money laundering reporting requirements, satisfying capital adequacy requirements and the ability to meet local accounting and other reporting requirements.
In short, you cannot benefit from this ground breaking regulatory regime without contributing to Gibraltar’s reputation and economy. It is worth noting that if you already operate in Gibraltar under another licence, you may not require DLT licensing. The requirement for substance, however, is unaltered.
Initial Coin Offerings (ICOs) are a means of raising finance, especially by early-stage tech start-ups, typically for DLT related projects. Gibraltar isreleasing a complementary regulatory framework covering the promotion and sale of tokens or coins, operating secondary market platforms trading in tokens, as well as providing investment and ancillary services relating to tokens. Gibraltar’s token regulations are aligned with the DLT framework.
Cryptocurrencies or digital currencies can be traded for other assets, such as conventional fiat money, or different digital currencies via acryptocurrency exchange or digital currency exchange (DCE). For any clients with requirements to trade crypto via a corporate entity, Sovereign offers the following services:
- Establish the legal entity
- Assist banking introductions
- Custodian Services through trusted partners
- OTC, discretionary and execution only investment services through trusted partners
Gibraltar’s Experienced Investor Fund (EIF) has become a popular vehicle to establish crypto funds. The EIF is an authorised collective investment scheme that is exclusively for investment by experienced investors and is designed to invest in a wide range of traditional or alternative asset classes. No regulatory approval is required before a fund can begin to raise capital and commence with its investment activities. A fund may be launched based on a legal opinion that confirms that the fund has met all legal and structural requirements for its operations, and provided that the fund’s documentation is submitted to the regulator for registration within 10 business days of its launch.
Sovereign will engage a local law firm of your choice to ensure that your fund is properly established.
Gibraltar is a popular jurisdiction for investment funds and their managers, offering robust fund legislation, favourable tax advantages, within an EU framework, efficient regulation, the flexibility of a small jurisdiction and quality infrastructure. Gibraltar’s main attraction to investors is as an EU domicile, which provides entry to the single market in financial services, thereby enabling passporting throughout the member states of the EU.
An Experienced Investor Fund (EIF) is an authorised collective investment scheme that is exclusively for investment by experienced investors and is designed to invest in a wide range of traditional or alternative asset classes.
No regulatory approval is required before a fund can begin to raise capital and commence with its investment activities. A fund may be launched based on a legal opinion that confirms that the fund has met all legal and structural requirements for its operations, and provided that the fund’s documentation is submitted to the regulator for registration within 10 business days of its launch.
A Gibraltar fund may also be licensed in accordance with the EU laws on UCITS (Undertakings for Collective Investment in Transferable Securities) where the intention of the fund is:
- To operate with the sole object of collective investment in transferable securities or in any other liquid financial assets
- Raise capital from the public and invest on the principles of risk-spreading;
- Issue units that are, at the request of holders, redeemed, directly or indirectly, out of those assets.
Non-UCITS Retail Funds can be structured as hedge funds.
The EU’s Alternative Investment Fund Managers Directive (AIFMD) was transposed into Gibraltar law on 22 July 2013 and investment management firms that fall within the Directive can avail themselves of the European passport and market across EU member states.
The online gambling industry has grown tremendously alongside the worldwide web. The first casino is thought to have gone online in 1994 and By 1998 when the first online poker sites were launched, the global online gambling and betting market was estimated to be worth USD830 million per year. Fast forward Two decades later this market accounted for USD45.8 billion and is expected to double to over USD90 billion by 2024, which would represent a compound annual growth rate of 10.9% (Source: Zion Market Research).
Technological developments such as in-play betting, hand-held devices and Smartphone penetration have contributed hugely to growth in the industry over the past decade and this trend will continue as improved connectivity and accessibility enable more players to take part online from anywhere in the world. New growth areas currently being developed are the use of crypto currencies and virtual reality games.
This growth has also been facilitated by developments in licensing and regulation. It is essential for online gambling (eGaming) operators to be licensed and regulated in a reputable jurisdiction if they are to demonstrate legitimacy around the world.
The intellectual property (IP) associated with a business name or system can be one of its most valuable assets – but only if it is properly protected. Any business that wishes to establish a national or international identity should take steps to protect the use of its name, logo or other IP, such as patent rights, formulae/processes, designs, trademarks, franchises, licence agreements, ‘know-how’ and copyrights.
It is not possible to make an original application to register a patent or trademark in Gibraltar. Applications must be made to the UK Intellectual Property Office (UKIPO) and then extended to include Gibraltar within three years of the date of issue of the UK patent or trademark. The register for patents or trademarks is based at Companies House, Gibraltar. The holder can take action through the UK or Gibraltar courts to enforce a patent or trademark.
Income from IP rights may be derived by way of royalties. As with other sources of income, the tax planning of IP should focus on maximising the after-tax profits. To ensure that arrangements made to receive royalties are effective, it is necessary to analyse how various countries treat the payments of royalties, whether tax is withheld on such payments and how the income receipts and expenditures are treated.
Sovereign can provide cost effective advice to clients on the acquisition, exploitation, use and enforcement of IP rights on both a domestic and cross-border basis.